Celgene Misses, Reaffirms - Analyst Blog
April 26 2012 - 8:46AM
Zacks
Celgene Corporation’s (CELG) first quarter 2012
earnings (excluding special items but including stock-based
compensation expense) of 96 cents per share beat the year-ago
earnings by 35%. Higher revenues drove earnings in the reported
quarter. The Zacks Consensus Estimate was $1.02 per share.
Quarter in Details
Total revenue climbed 13.2% to $1.27 billion in the first
quarter of 2012. Revenues were boosted by the impressive
performance of Celgene’s cancer drugs Revlimid, Abraxane and
Vidaza. Revenues for the quarter were, however, below the Zacks
Consensus Estimate of $1.32 billion.
Net sales of Revlimid, the key growth driver at Celgene, came in
at $861 million, reflecting an increase of 17% over the year-ago
period. The drug did well both in the US (up 17%) and international
markets (up 16%).
Net sales of Vidaza climbed 14% to $186 million, driven by
strong sales in international markets. Sales in international
markets climbed 23% to $112 million. Results were aided by launches
in many new markets.
Performance of the drug in the US, where it went off patent in
May 2011, was not very impressive. On a year over year basis, sales
climbed a mere 3% to $74 million. On a sequential basis, US sales
of Vidaza were down 14%, mainly due to reduced levels of wholesaler
inventory.
Net sales of Abraxane climbed 41% to $104 million. Sequential US
sales were hurt by the reduced levels of wholesaler inventory
coupled with the restoration of supply (in maximum capacity) of the
generic version of Abraxane.
Net sales of another cancer drug, Thalomid, continued to decline
due to the availability of better alternatives. Thalomid sales were
$78 million, down 9%.
Research and development (R&D) expenses (excluding
stock-based compensation and other special items) climbed 13.3% to
$315 million in the reported quarter. The increase was primarily
attributable to Celgene’s efforts to expand its pipeline.
Selling, general and administrative expenses (excluding
stock-based compensation and other special items) in the quarter
increased approximately 10.7% year-over-year to $299 million. Costs
associated with the marketing activities for Revlimid and
pre-launch activites for pomalidomide primarily led to the rise in
SG&A expenses.
We note that Celgene filed a new drug application (NDA) with the
FDA for pomalidomide for treating patients suffering from relapsed
and refractory multiple myeloma during the quarter. European
approval will be sought for the same indication later in the
year.
Outlook Backed
Apart from announcing financial results, Celgene reaffirmed the
bright outlook for 2012, provided by it earlier. Adjusted earnings
(excluding stock-based compensation expense and other special
items) are projected in the range of $4.70-$4.80 per share,
representing year-over-year growth of 25%. The Zacks Consensus
Estimate for 2012 is $4.32 per share.
Adjusted revenues are projected in the range of $5.4-$5.6
billion, up 15%. The Zacks Consensus Estimate is $5.5 billion,
within the guidance range provided by the company. Revlimid will
continue performing well with sales projected in the range of $3.75
- $3.85 billion, up 19%.
Neutral on Celgene
We have a Neutral recommendation on Celgene. Our long-term
stance is in-line with the Zacks #3 Rank (Hold rating) carried by
the company in the short run.
Apart from Celgene, other major players in the pharmaceutical
sector -- Bristol-Myers Squibb Company (BMY) and
generic player Mylan Inc. (MYL) -- also reported
earnings this morning. Gilead Sciences Inc. (GILD)
will report earnings after the close of the market today.
BRISTOL-MYERS (BMY): Free Stock Analysis Report
CELGENE CORP (CELG): Free Stock Analysis Report
GILEAD SCIENCES (GILD): Free Stock Analysis Report
MYLAN INC (MYL): Free Stock Analysis Report
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